Kogan Back Spinning Yarns To Deflect From 28% Fall In Sales, Claims Business Is Now “Like Apple”

Ruslan Kogan’s reputation as a retailer has been exposed with the online operator now trying to position himself as a software Company, one that sends out thousands of annoying emails to customers.

His about turn comes as his retail sales crashed 28% during the past year ending in July 2023.

Gross sales fell to $844.8 million, and revenue was off 31.9 per cent to $489.5 million.

Ruslan Kogan is well known for trying to change the narrative or deflect from difficult questions; however, investors have had their say with the stock crashing 14.4% today on the poor result.

The 26% drop in gross profit to $136.6 million, and a loss of $25.4 million for the 2023 financial year has exposed Kogan’s poor retailing skills when retailers such as Super Cheap Group and JB Hi Fi are reporting increased sales.

At this stage it’s not known whether Kogan’s multiple fines by the ACCC has had an impact on customers deciding not to buy from the online retailer.

At the start of COVID the Federal Court ordered Kogan Australia Pty Ltd (Kogan) to pay a penalty of $350,000 for making false or misleading representations about a tax time sales promotion, in breach of Australian Consumer Law.

It was not the first time that Kogan has been fined by an Australian Court.

During COVID Kogan had major stock and inventory problems.

In their latest filings the business has run down its inventory, claiming that stock on hand has reduced to $68.2 million on June 30, or more than 57%.

However, investors have bought back into the stock and Mr Kogan believed this was down to advances in its “platform-based” businesses.

He told The Australian Financial Review that platform sales exceeded sales derived from its retail inventory for the first time, and that he expected this to grow and reduce its reliance on retail performance.

The business also markets Kogan Mobile, Kogan First subscriptions (its version of Amazon Prime), Kogan Internet and Kogan Energy.

It also appears that Kogan now see themselves as being similar to Apple.

“While Apple’s top line continues to grow at a moderate pace, its share price has been going ballistic because everyone’s valuing them like a software business,” Mr Kogan said.

“Even if nobody changes their Apple Mac or their iPhone, their apps and Apple TV subscriptions are going to keep renewing … And investors see this software revenue as the best for business because it is the least risky and highest margin.”

As we know from the past what Kogan claims has to be taken with a pinch of salt.

CEO Ruslan Kogan is the guy who in 2011, bragged to tech media, prior to his business being floated, that Apple would no longer be selling Apple products in “three years’ time”. He even bet JB Hi Fi CEO $1M dollars on the outcome.

JB Hi Fi is still selling Apple products and Kogan welched on the bet.

He also said up to 30% of JB Hi Fi sales were from Apple products a claim which JB Hi Fi denied.

The head of small cap research at RBC Capital Markets, Wei-Weng Chen, told the AFR it was premature to value Kogan as anything other than a retail stock”.

Ruslan Kogan is now claiming that the low-cost nature of products sold on Kogan.com meant it would fare better than other retailers during a cost-of-living crisis.

“We’ve done relatively well, and that is driven in part by the fact that we’re not selling Louis Vuitton handbags and BMWs and Rolls Royce’s, we’re selling value-based products,” he said.

“When the economy is flying, people that want a new TV will just look up the latest Samsung and bang, click, buy, done, but at the minute we are seeing more specification-based buying, where someone works out they want a 55-inch TV that connects to the internet to watch Netflix, and they come to us for a deal.”

Despite this not helping him during the past three years, he does have a reputation for spinning yarns for investors.